Patents (Amendment) (EU Exit) Regulations 2018
Lord Henley Excerpts(5 years, 9 months ago)
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Lord Henley
That the draft Regulations laid before the House on 28 November 2018 be approved. Debated in Grand Committee on 14 January.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, as with the previous instrument, this was the subject of a wide-ranging debate in Grand Committee on 14 January. Again, I wrote to noble Lords who spoke in that debate to respond to the points raised, and also placed a copy of my six and a half-page letter in the Library. Since the Grand Committee debate, I have held further helpful and constructive meetings with the BioIndustry Association and the ABPI. Let me make it clear that I value those regular contacts and the insight that they bring on behalf of this important industry. I will continue to have discussions with representatives from industry and hear their perspectives as we move forward. As Life Sciences Minister within the department, my door is always open.
In my discussions with the life sciences sector, it has made clear the value and importance of supplementary protection certificates—SPCs—to the industry, and its concerns about the potential for those valuable IP rights to be affected by a no-deal exit. I hear and understand that. The only intention of this instrument is to fix what would break and to do so in a way that preserves the current operation of the law. We are considered to have one of the strongest IP systems in the world and the Government remain fully committed to maintaining that position. That is why we are preserving the status quo so far as possible in a no-deal exit. It is right that we continue to prepare for a no-deal scenario as long as that remains a possible outcome.
One issue raised in Grand Committee, and addressed in my letter, dealt with the approach taken to consultation on this instrument. In my meetings with industry bodies, we had discussions on this point and on why the usual wide engagement by the IPO was not possible on this occasion. The withdrawal Act established the policy direction which this instrument follows: to preserve the existing law at the point of exit and maintain the status quo as far as possible, ensuring a smooth transition for business. As the Government’s consultation principles make clear, a consultation on a policy which is not changing would not be of benefit. Nevertheless, the IPO wanted to ensure that the drafting of the instrument achieved its aims, by getting external views. Therefore, it was decided, consistent with the constraints in place, to carry out a confidential technical review of the drafting. In addition to providing valuable feedback on the drafting, the participants also raised wider concerns, including on the issue of the SPC term.
The recent engagement with industry bodies also touched on this issue, which was raised in Grand Committee by the noble Lord, Lord Warner. As I reassured them in those discussions, the sole objective of this instrument is to fix parts of the retained law that would otherwise break upon exit. Therefore, the changes being made simply ensure that an SPC which is granted the day after exit would be given exactly the same term of protection as it would if granted the day before exit. Without such intervention, term would have to be calculated without any reference to authorisations granted in the UK. Innovators have expressed the view that this intervention should be to rely solely on a granted UK authorisation to calculate term. This would give a longer period of protection if the product comes to the UK later than the EEA. As I set out in my letter, this has the potential to tip the balance between the interests in this area at a time when maintaining the status quo is critical.
I fully understand that innovators have concerns about wider potential effects of a no-deal exit on the regulatory environment; that has come through strongly in my recent discussions. These are legitimate concerns which must be carefully explored, and it is entirely correct that they are raised. Pharmaceutical innovation is a vital part of the UK economy; the companies which research and develop new drugs are some of our most important and valuable, and we benefit greatly from their work. If we end up in a no-deal situation, I am keen to start immediately exploring these issues with innovators and all other interests, and to make progress as early as possible after a no-deal exit.
In conclusion, by preserving the status quo as far as possible in a no-deal exit, I hope that the Government’s aim is clear—to maintain the UK’s highly regarded IP framework and the important protection that it provides. I beg to move.
Lord Warner (CB)
My Lords, I raised several concerns about this SI in Grand Committee, as the Minister recognised. As he knows, these were the result of briefings from the BIA and the ABPI, with which I am glad to say he has had further meetings. However, since his meetings both these organisations have provided me with further briefing about their continuing concerns.
Before turning to these concerns, I will briefly place them in the wider context of the damage done by Brexit—and the Government’s conduct of it—to our highly successful life sciences industry. This damage could make Nissan and Sunderland look like small beer if we are not careful. From the Prime Minister down, the Government have shown a poor appreciation of the damage being done to this sector: the loss of the EU medicines regulator from the UK; the loss of investment opportunities in the UK; the missed opportunities for collaborative international joint research, development projects and clinical trials; the drain from the UK of talented overseas scientists; and the likely loss of a growing amount of our own homegrown scientific talent.
To this litany of casual vandalism the Government have now added a statutory instrument which, if it were used in the case of our exiting the EU with no deal, would reduce the protection of exclusive intellectual property. The problem is caused by the SI’s approach to supplementary protection certificates—SPCs—which are a key part of the intellectual property protection framework for pharmaceutical research. SPCs are intended to give a period of exclusivity from inherent risks in the development of new pharmaceutical products. But the industry’s trade bodies—both the BIA and the ABPI—are convinced that, in the real world that they occupy, the SPCs as structured in this SI are fundamentally flawed.
In their view—the exact opposite of the Minister’s—this flaw reduces the period of exclusivity for drugs authorised in the UK, because the start of the period for exclusivity in the UK is backdated to a drug’s earlier authorisation in the EU. They are losing a bit of their exclusivity period. The chief executive of the ABPI put this extremely well:
“Britain is internationally renowned for its strong IP framework and this has made it an attractive home for investment from all industrial sectors, including pharmaceuticals. We’re concerned that these measures are a step backwards and seriously undermine the strong life sciences sector that we’ve worked so hard to build over the past 70 years”.
These views are shared by the BIA.
The problem has arisen in large part from the Government’s failure to consult properly on these regulations at the outset—as has been shown to be the case in other no-deal SIs, as we have already discussed. I drew the Minister’s attention in Grand Committee to the inadequacies of that consultation process, and I am pleased to see that he seems to have accepted some of that and tried to rectify matters through proper discussion with the ABPI and the BIA. I congratulate him on taking that particular initiative.
I think that the Minister will be pleased to know that I do not intend to bang on further about past misdemeanours. Instead, I ask him to give the industry two clear-cut assurances about the future conduct of the Government. First, I would like to hear it from him, on the record, that the Government recommit to the UK’s status as a world leader in safeguarding intellectual property and commit to make no further erosions of the UK intellectual property framework; and, secondly, that the Government commit to a specific review of the intellectual property legislation being introduced through statutory instruments as part of the no-deal Brexit planning. The reason for that second one is, frankly, that the industry is very sceptical about whether the Government will just drop these proposals if there is a deal. Ministers in the Government need to understand that they have lost a lot of the confidence of this sector. The time has come for them to start to rebuild that confidence in an industry which is vital for this country’s future.
Lord Henley
My Lords, first, I repeat that we do not want to move away from the gold standard of IP that we have. Secondly, I make it quite clear that I regularly meet the two organisations referred to, the BIA and the Association of the British Pharmaceutical Industry. The chief executives of both those organisations sit on our Life Sciences Industrial Strategy Implementation Board, so I see them both regularly. I hope that we have a very good relationship and that full and frank discussion is always possible between me and them and between them and the department more generally.
Lord Warner
I just want to be clear to the Minister. What representatives of the industry are telling me in the letters and briefings they have sent is that they have interpreted the Government’s behaviour as meaning that they think that the Government is signalling that we are moving away from a gold standard of intellectual property protection.
The reason they say that is that, in this particular case, we will now have two regulators—when we come out of the EMEA, we will have a UK and an EU regulator for pharmaceutical products. I cannot put it any more clearly than this. They are saying that, if you apply for authorisation of a drug under the UK regulator, the period of exclusivity should start from the date of authorisation; it should start not from any authorisation that may have been given by the EU regulator at an earlier date for the drug to be introduced in the EU but from the authorisation when the drug is authorised in the UK. I do not think that I can be clearer than that. There is clearly a fundamental difference of view between the industry and the Government on this issue. No amount of fine words from the Minister is going to conceal that.
Lord Henley
My Lords, if the noble Lord, Lord Warner, will allow me, I was trying to say that, first, I want to continue discussions with them and we will do that. I do not believe that we are as far apart as the noble Lord is suggesting; nor do I believe that we are undermining the gold standard in IP that we wish it to achieve.
We do not want to do anything to undermine our large and successful pharmaceutical industry. It is one of the jewels in the crown, and has a turnover of £41.8 billion. I remind the noble Lord that it has seen a large amount of investment in research, particularly since 2016, and considerable new investment from abroad—again, since 2016. This is an industry that is flourishing and will continue to flourish. We believe that the level of investment within that industry that is supported by the SPC system, which ensures that British businesses are compensated for the period of patent loss protection while requesting market authorisation, is very important. Making sure that our law continues to work is therefore important.
The noble Lord, Lord Warner, says that there is a flaw in the SI: he says that there is a policy change. There was considerable debate on the issue in Committee. As I said previously, I do not share the view that there is a policy change here. This instrument keeps in place the existing calculation of SPC duration. At present, it is calculated from the first market authorisation in the EEA, which includes the UK. The instrument ensures that the exact position remains in place after exit and the calculation is the same. It is precisely this kind of deficiency that the withdrawal Act gave Ministers powers to affect.
The noble Lords, Lord Warner and Lord Adonis, then talked about the industry and said that it wants something different. The BIA and the other organisations representing pharmaceutical innovators would prefer the legislation to be changed so that the term of an SPC would be calculated based on only a UK market authorisation. They argue that the exit may lead to industry launching new pharmaceutical products later in the UK and that they may receive later market authorisation than in the rest of the EEA. That would give a period of SPC exclusivity for a longer period than under current laws. I can see why they argue that point: it is perfectly legitimate that they should do so. However, it would be a significant policy change, affecting the whole of the pharmaceutical industry and the NHS. I do not believe that it would meet the Government’s commitment to avoid a cliff edge for businesses by maintaining the status quo, which is what we are seeking to do, on exit day.
I turn now to the commitment that the noble Lord, Lord Warner, sought from me about whether we would commit to a review within two years. As I have already said, I am keen that we immediately start to consult with all those bodies concerned, and more widely—indeed, with everyone that noble Lords can think of—and explore the landscape after a no-deal exit, and also to look at what happens in other events, to make progress on the issues that concern them. As part of those discussions, I am very happy to talk about the timing and scope of any review of the SPC term. The Government have said that they will review the data and market exclusivity arrangements within two years of a no-deal exit—should there be such an exit, and again we have made it clear that we neither expect nor want a no-deal exit—in order to make sure that we remain competitive. I am sure that we can discuss with stakeholders how any review of SPCs would fit in with that work.
The noble Lord, Lord Clement-Jones, asked about unified patent court judgments in the UK. I can tell him that the UPC is an international court and is not part of the UK judicial system. Its judgments are therefore not binding but can be considered, as is the case with any other foreign judgments. That is obviously a matter for the courts.
The noble Lord, Lord Stevenson, also asked about the unified patent court. I can tell him that the unified patent court and the new British patent will commence shortly after Germany ratifies the UPC agreement, although obviously we have no control over what goes on in Germany. Germany’s ratification is currently on hold pending the outcome of a complaint against the UPC to its constitutional court. Finally, I can tell the noble Lord that the London building is indeed ready.
Lord Clement-Jones
My Lords, how can it be a unified patent unless there is unified set of jurisprudence to cover it?
Lord Henley
My Lords, as I have said, these are matters which the UK courts can take into consideration. However, the judgments of international courts are not binding on them. I think that I have answered all the questions and I beg to move.
Trade Marks (Amendment etc.) (EU Exit) Regulations 2018
Lord Henley Excerpts(5 years, 9 months ago)
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Lord Henley
That the draft Regulations laid before the House on 28 November 2018 be approved. Debated in Grand Committee on 14 January.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, as with earlier instruments on exhaustion and patents, this was debated on 14 January in Grand Committee, where noble Lords raised questions about the consultation and impact assessment process. Noble Lords also put some questions on technical points specific to this SI, seeking clarification on ongoing proceedings, costs and priority dates of pending applications. I repeat my thanks to all noble Lords who shared their time and expertise with the Committee on those matters. I addressed many of the points raised in my letter of 21 January to Members of the Committee. I hope that my answers were helpful and have met the expectations of noble Lords who took part.
The Government have laid these regulations to ensure continued protection in the UK for EU trademarks, thereby providing businesses with maximum security, clarity and certainty. Under current law, businesses can obtain an EU trademark, which, as a unitary right, provides protection across the whole of the EU. When we leave the EU, that protection will no longer extend to the UK. To address this, the Government will create a comparable UK trademark for every EU right that is registered on and before exit day. These comparable trademarks will inherit earlier filing and priority dates recorded against the corresponding EU trademarks and will be fully independent UK rights that can be challenged, assigned, licensed or renewed separately from the original EU trademark. Each comparable trademark will be created automatically and free of charge, meaning that a minimum administrative burden will be placed on rights holders. Those not seeking to hold comparable UK trademarks will be able to opt out by notifying the IPO. The instrument also sets out the Government’s approach for accommodating the 85,000 trademark applications which are pending before the EU Intellectual Property Office on exit day.
A number of technical issues were raised both during and after Grand Committee. Given my answers in my letter to noble Lords, I shall focus on those outstanding concerns which were raised subsequent to my letter. The noble Baroness, Lady Bowles, inquired in Grand Committee about the effect of priority dates on pending applications and compatibility with the Paris convention. I was pleased to have a meeting with the noble Baroness and trademark legal professionals to discuss these and other matters that she raised. At that meeting I clarified that we believe the instrument is compatible with the UK’s obligations under the provisions of the Paris Convention for the Protection of Industrial Property, which contain rules on claiming international priority.
I remain confident that the chosen approach provides the most practical means for preserving the rights of pending EU trademark applications. In respect of issues identified with the conversion of EU trademarks, I have also confirmed to the noble Baroness that such rights will be preserved via provisions contained in the Interpretation Act 1978. A copy of my letter, which addresses the noble Baroness’s concerns on both the Paris convention and conversion rights, will be placed in the Libraries of both Houses. I found our discussions on these two issues most helpful, and was grateful to the noble Baroness for her valuable insight as a trademark and patent attorney. Building on those discussions, I will ensure that her points are reflected in business guidance to be published by the IPO closer to exit day.
In conclusion, these regulations are vital to ensure that businesses do not lose their trademark protection in the UK, and to ensure the continued effectiveness of our domestic trademark system if we do not secure a deal with the EU. I hope noble Lords will support the draft regulations, which I believe provide businesses with clarity and certainty regarding their intellectual property. I beg to move.
Baroness Bowles of Berkhamsted (LD)
My Lords, first, I declare my interests. I am a retired European patent and trademark attorney, but, if I were to un-retire, I would find myself among those unfortunates who, going forward, would no longer be able to practise before the EUIPO in respect of trademarks and designs. This matter—that a part of professionals’ representation is cut off—is not one we have discussed before. My noble friend Lord Clement-Jones was interested to hear what the Minister had to say on the issue, and to confirm my interpretation that current UK representatives will no longer be representatives is correct.
This SI largely replicates the provision in the withdrawal agreement, so it is not really a no-deal SI; it is the shape of the SI that will happen in due course—if there is a deal—possibly with some minor changes to dates and other things, but I could not see anything that differed from what one would expect under the withdrawal agreement.
As the noble Lord, Lord Henley, has explained, I had a long meeting with him and officials from the department and the IPO; I thank them very much for their time and for listening to my views and those of some representatives. I apologise to the noble Lord, Lord Adonis, but I did a little secret consultation myself, just to make sure that, being retired, I had not lost the plot. What I wanted was a statement that there would be continuity of rights at the point of Brexit so that, although the SI was internally consistent under UK law—it gave clear instructions as to what our courts would decide—it would also neatly fit within the usual conventions. That required only an assertion, which we have effectively had, that the rights continue—rather than dying and, in some way, being resurrected.
The letter that the noble Lord, Lord Henley, has now placed in the Library, and which was addressed to me on 4 February, is interesting. First, he deals with the priority rights that I discussed in the Moses Room in Grand Committee. The second issue I raised was about an EU trademark application that was refused before Brexit but, under the rules, it can be converted to a national application by applying at the EU end for three months. There was concern that there is no mention of what happened to those applications and to that conversion right. Was is lost or was it not? Some representatives thought that it was lost.
The letter refers to the Interpretation Act, and it is worth pointing out what that Act says. It confirms that an Act that repeals an enactment does not affect,
“any right, privilege, obligation or liability acquired, accrued or incurred under that enactment”.
The letter goes on to say that the EU trademark regulation will constitute EU retained law for the purposes of the European Union (Withdrawal) Act 2018; and that pursuant to the power in that Act, it is repealed and replaced by the UK regulation. This solves the problem. There is a definite assertion here that the right to convert will be retained but the conversion will be done entirely before the UK IPO, instead of starting it off in the EU. This general application of the Interpretation Act would apply to any regulations, not just these; it might be applied to those on patents that we have just discussed. That is one reason why I asked that the letter be put in the Library. It is possible that we contemplated this when we were going round the loop of the withdrawal Act, but I had misplaced it in my mind, and that might be the case for other noble Lords.
I am satisfied that it is “job done” on the confirmation of continuity and the issues I sought reassurance on. I am also grateful to the Minister for explaining that the Government will take into account the various other measures we raised, which are much more to do with practice.
The salient point here is that some 60% of trademark applications are made by individuals for their own businesses, without professional assistance. So it is quite important that the advice the IPO is able to give keeps them up to speed with changes that they might not be aware of, such as that they still have the conversion right and for how long.
There is still a matter to be dealt with: for nine months, there are latent rights hanging about. If you file a trademark application, it might look like the way is clear and then, all of a sudden, it is not, because people want to continue with the one they have under the EU. The question is how the IPO is to deal with notification, so that an applicant knows the full picture before making decisions that might be otherwise prejudicial to their rights when deciding whether to go ahead and have notice sent to people or to withdraw their application. My proposal was that they have to have the right to be able to suspend until that nine-month period is over, if it looks as though there is something in their way. Obviously, this is not a matter for this statutory instrument, but it will turn out to be a matter of concern if a significant number of those 85,000 applications are continued with. From what I can gather, it is likely that more than half will be, so intervening applicants will have a difficult nine months to navigate.
Lord Adonis (Lab)
My Lords, this was the famous statutory instrument which referred to consultation with,
“a small group of trusted individuals”.
We had a long discussion in Grand Committee about who should or should not be trusted at the Government’s discretion. This was not satisfactorily resolved. However, the noble Baroness, Lady Bowles, has continued those conversations; I am sure that her discussions were with wholly trusted individuals and that her further discussions with the Minister have led to improvements in the regime that will follow from the statutory instrument.
I would like the Minister to clarify the issue of renewal fees so that I and the people reading our proceedings fully understand it. This was raised in Grand Committee, and the noble Lord referred to it in his six and a half page letter. As I understand it, the key passage is about what happens when people need to hold two sets of trademarks, rather than one, after renewal. I want to be clear that I have understood this correctly: the letter from the noble Lord, Lord Henley, says that around 10% of trademarks which are renewed each year,
“are held by UK businesses, and so we estimate that 60% of the 1.3 million newly-created comparable UK trade marks will be renewed at an annual cost to UK business of around £2.5 million in additional renewal fees”.
Are those wholly additional fees that businesses and individuals will have to pay, over and above what they would pay at the moment? Have I correctly understood that they need to pay those fees because they are very likely to need to hold two sets of trademarks—for the EU and the UK—in parallel? This has come out only through our consideration of this instrument and was not clear in the initial consultation or the Explanatory Memorandum. I am not in this industry, but this would seem to be a significant additional burden. People need to be aware. Case by case, we are seeing all of these additional burdens as a result of a no-deal Brexit. It is deplorable that we are imposing additional costs on businesses and individuals in this cavalier way.
Lord Henley
My Lords, I am very grateful to all those who have spoken. I was particularly grateful to hear the noble Baroness say—I think I have this right—the words, “job done”. I hope we can get this order on the statute book. Although the noble Baroness brings great expertise to this matter, there are others—I dare say the noble Lord, Lord Stevenson, would agree—who do not have that same degree of expertise. There is to some extent the sense of cold towels wrapped around our heads and strong black coffee as we consider these difficult and technical matters. We are grateful for that expertise. Even if the noble Baroness has now retired from this area, we will continue to discuss these issues with her and other trusted individuals, with the noble Lord, Lord Adonis, and with anyone else—trusted, untrusted or otherwise—who has a relevant concern in these matters; it is very important to do so. As the noble Lord, Lord Stevenson, put it—so well, as always—there are benefits to the owners of trademarks and benefits to consumers; it is therefore appropriate that we strike the right balance between those two groups. Dealing with conflicting rights is one of the difficult things that those in government have to do.
The noble Baroness asked about representation at the EU Intellectual Property Office. The EU trademark regulation mandates that a representative must be based in an EU member state in order to represent clients before the EU Intellectual Property Office. Officials in the IPO and in the Ministry of Justice are aware of this issue and have held many discussions with representative groups. As we turn to the future economic partnership, we will seek a comprehensive arrangement on trade and services, including professional and business services.
I want to make it quite clear, as I did in Grand Committee, that we believe it important that the guidance we offer to business is targeted and clear, particularly as the noble Baroness stressed the number of unrepresented businesses. Although the sensible thing would be to take advice from the noble Baroness’s profession, clearly many people prefer to avoid those in the legal and other professions. We will ensure that the right guidance is offered and highlight the importance of searching the EU register. I am grateful to her for raising those issues again.
The noble Lord, Lord Adonis, raised the subject of renewal fees and costs and referred to some remarks from my letter. Analysis of existing UK rights shows that the average cost of renewing a comparable right will be approximately £300, due every 10 years. If rights owners do not wish to renew their UK trademark, for example because they have no interest in preserving UK protection, they do not have to pay the fee. But, as the letter makes clear, businesses will incur additional costs should they want to enforce their UK-compatible rights or defend them against a challenge. That cost will vary depending on the length of proceedings and the amount of evidence considered. However, as the letter says, the IPO estimates that the total cost to UK businesses would be around £330,000 per year. The noble Lord, Lord Adonis, can make use of that information as he wishes in any discussion of the merits or otherwise of Brexit.
On his last point, the noble Lord, Lord Stevenson, will appreciate that it is only possible for us to pass legislation affecting the UK. The withdrawal agreement will provide for reciprocal measures with the EU, when and if that is agreed. I believe I have answered all the questions put to me.
Employment Rights (Amendment) (EU Exit) (No. 2) Regulations 2018
Lord Henley Excerpts(5 years, 9 months ago)
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Lord Henley
That the draft Regulations laid before the House on 31 October 2018 be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I hope I shall speak also to the other three sets of employment rights regulations before the House on the Order Paper. These SIs are part of a package of measures that the Government have promised to introduce to make sure we are prepared in the event that we leave the EU without a deal. It is important to remember throughout this debate that these changes will not be needed if there is a deal. The SIs in front of us make amendments to EU-derived employment law in both Great Britain and Northern Ireland.
As noble Lords know, new directives agreed in the EU are transposed into UK law. The act of the UK leaving the EU therefore does not remove these rights, as they are already in UK law. In passing the European Union (Withdrawal) Act, Parliament gave the Government the ability to ensure that necessary changes can be made to keep the statute book in proper working order. These statutory instruments make only minor changes to language to ensure that existing regulations reflect that the UK would no longer be a member of the EU. These changes are necessary to ensure that the statute book is accurate and clear. It is important that businesses, employees and citizens have clarity on their rights and responsibilities.
We are not making any changes to employment rights or employment policy through these regulations. The Prime Minister, my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy, and many other colleagues have been clear that there will be no rollback of workers’ rights when we leave the EU. I wish to highlight that these statutory instruments would make some changes to the regulations for European works councils. This would be an unavoidable impact of the UK leaving the EU without a deal. I can explain these changes in more detail later.
Looking to the future, the political declaration on our future relationship with the EU states that we will build on the withdrawal agreement commitment not to reduce our shared standards—a commitment not to regress from existing EU legislation. I will now go into more detail on the amendments made by the statutory instruments. The Employment Rights (Amendment) (EU Exit) Regulations and the Northern Ireland equivalent regulations repeal four powers that the Government can use to make secondary legislation. These powers relate to parental leave, part-time work, fixed-term work and information and consulting rights. The powers that are repealed relate only to obligations that the Government would be under from EU directives. As the Government would not be under these obligations if the UK left without a deal, these powers would be redundant. We would not be able to use them even if they remained. For clarity and legal certainty, we are seeking to remove these powers. Removing them in no way changes the rights that workers enjoy, nor the Government’s ability to protect workers in the UK in future.
The Transnational Information and Consultation of Employees Regulations 1999 are also amended to reflect the UK’s departure from the EU. Withdrawing from the EU will mean that the UK is no longer included in the EU rules on European works councils, which is why changes are required to the legislative framework set out in those TICE regulations. Provisions relating to existing EWCs—which can continue to operate in a no-deal scenario—are maintained. These include the protections for workers and their representatives on EWCs.
I move on to the next pair of regulations—the Employment Rights (Amendment) (EU Exit) (No.2) Regulations and their Northern Ireland equivalent. These are listed first on the Order Paper, despite their numbering. The amendments made through these regulations amend the text of existing Acts to reflect the UK’s departure from the EU. None of these changes affects the rights workers enjoy or changes employment policy.
The changes that may elicit the greatest interest across the House are those made to Section 38 of the Employment Relations Act 1999 and its equivalent in Northern Ireland. These relate to TUPE protections. The SIs amend the wording of the existing legislation to maintain the current scope of a power currently derived from EU directive obligations. This power has been relied on to make secondary legislation to cover situations where workers are not covered by TUPE regulations. The revised clause still retains the breadth of the existing powers for the Government to amend TUPE regulations to protect the rights of workers. The changes also protect the regulations that have previously been made under this power. These amendments do not change the rights to which workers are entitled.
There is one further point I wish to bring to the House’s attention. Of course, I hope that these regulations will not need to come into effect. I hope agreement can be reached with the EU and these regulations can be revoked. However, in the event that there is no agreement—no deal—it is vital that these regulations are enacted. Failure to pass these largely technical regulations would mean uncertainty over both workers’ rights and employers’ obligations. This could lead to disruption for businesses and citizens, and an increased risk of litigation. This is in no one’s interest. It would be unacceptable not to provide this clarity to businesses and I hope noble Lords will accept that the Government are delivering on our workers’ rights commitment and that these SIs can therefore be approved. I commend them to the House and beg to move.
Lord Monks (Lab)
My Lords, it is pretty obvious that these regulations were drafted—as was necessary—before the conclusion of the current talks that the Prime Minister very belatedly initiated with the TUC and others about employment rights post Brexit. I understand that talks with the Business Secretary are still going on. I hope that at the back of the Minister’s mind is the thought that these regulations might well be altered in the light of any progress made in these talks. In effect, the TUC seeks a binding guarantee that existing employment rights will not just be maintained but will not fall below any levels of protection developed in the rest of the European Union and its single market.
There is a lot going on in the European Union at the moment on precarious employment, the gig economy, self-employment and protections for migrant workers. The key point in these negotiations with the Business Secretary is whether there can be any chance of a meeting of minds in these areas. So far, the Prime Minister has said to the union negotiators, “Trust me to make sure we will do the right thing”. “Trust me” is not quite good enough, given the transitory nature of being Prime Minister or party leader in this country. Binding guarantees are rather better than good intentions in this area.
The backcloth to these regulations has been drawn to my attention by the TUC. It has circulated a brief to Members of this House, which I hope noble Lords have had a chance to read. The first point is a procedural one about consultation. I echo previous debates in the House today by asking: who has been consulted on the regulations?
I turn first to the regulation dealing with the European works councils. It is worth reminding Members of this House that there are 850 or so EWCs and UK workers are represented on 500 of them. About 10 million European workers in total are covered by European works councils. Although their performance varies, as one would expect, on the whole they have been very successful in holding companies to account on their future plans and strategies. This is an important dimension in a world where pressures from financial markets on companies not to consult, inform or discuss their plans are very powerful.
We welcome the Government’s commitment to maintaining British participation in existing EWCs, but this commitment does not extend—at least as yet—to including new ones or to absorbing into UK law any changes in EWC arrangements that come into force over the next period. No new EWCs will be required to be set up under UK law after Brexit. We are worried that—at least in some cases—UK workers might lose their seats on the European works councils and therefore put British jobs at much greater risk than those of our neighbours across the channel and the North Sea. In other cases, I think there would be voluntary agreement. There are specific measures on the rights of UK worker representatives, such as paid time off to attend meetings. I note that these will be maintained after Brexit in relation to EWCs, but not necessarily to new EWCs that have a British component.
If there is no deal, most of these regulations are designed to come into force on Brexit day. What is the timetable should a withdrawal agreement be concluded? In our view, they should not come into force during a transition or implementation—or indeed a backstop—period.
I turn to the 2018 family of regulations. These are centred primarily on TUPE—the transfer of undertakings legislation—which has been valuable in handling transfers of staff due to privatisations in particular. They came in during the 1980s, under the Conservative Government at that time. The TUC is concerned that the regulations in this area lack a clear definition of what “TUPE-like protection” actually means. This is the phrase that has been adopted. I have not come across this kind of legal term before. “TUPE-like” seems to lack precision, as least to my layman eyes. Unless someone can explain the contrary to me, I think a clearer definition is very much needed.
The regulations do not extend TUPE-like protection and provisions to employee representatives, only to employees. Under the TUPE regulations, employee representatives have certain rights to information and consultation, and they should be maintained in whatever the future holds for us in this area.
Next, can we have an assurance that the regulations will not be brought into effect in any transitional or backstop period—that we would stick with the status quo? The powers under Section 13 of the withdrawal Act would hinder the UK’s ability to keep up with changes in EU law during any transition or backstop period and in the event of no deal. We want to avoid workers in the UK during such a period not having the same rights and protections as workers in other European countries. Protection during a transitional or backstop period is very important.
Lord Stevenson of Balmacara (Lab)
My Lords, it has been a very helpful and useful debate and we look forward to hearing the Minister’s response. I have a number of questions that pick up on points already made by other noble Lords.
I will not delay the House too long, but I cannot let pass my normal question to the Minister, when dealing with SIs, about commencement dates. His department has a very bad record on bringing out regulations that commence on the common commencement dates. He promises to do better, but I have yet to see it. Unfortunately, these are not ones that I can tease him with because they are supposed to come out only if required and on exit day.
However, that is not quite the case here, is it? If we look at the Employment Rights (Amendment) (EU Exit) Regulations 2019 and the parallel regulations for Northern Ireland—which I think are numbers three and four as grouped on the Order Paper—both of them say that the regulations,
“come into force on exit day, subject to paragraph (2)”.
Paragraph (2) provides that certain elements of the regulations,
“come into force the day after the day on which these Regulations are made”.
When the Minister introduced the regulations, he said that we did not have to worry about them, that there was nothing in them that would need to take place, and that he was optimistic that there would not be a need for them to come into force. However, that is not true, as some parts of these regulations will come into force. In that context, could he reinforce what he said, which is that there is no diminution in existing rights as a result of the parts of these regulations that will come into force before exit day—and are, therefore, not strictly EU exit regulations in that sense, although we will pass over that, if the issue is indeed trivial, as I suspect it is, given that they seem to be corrections to earlier regulations and primary legislation that may not have kept pace with nomenclature in the EU. If that is not the case, the Minister owes it to the House to make a statement about exactly what is happening under these regulations.
More generally, several speakers—my noble friends Lord Monks and Lady Crawley and the noble Lord, Lord Balfe—have raised points about what is meant by the fact that, on the one hand, the Government are withdrawing powers which, as my noble friend Lady Crawley said, are currently in force and could be implemented to maintain workers’ rights and the rights of employee representatives but, on the other, the Government intend, although there is no evidence for this apart from the assertions of both the Prime Minister and the Minister, that there should be no diminution. Where is the legislation that is going to bring forward that levelling up to the existing situation? If the Minister cannot give us an answer, will he please write to us about what the Government’s intentions are? Clearly, the regulations amend Section 13 of the Work and Families Act. That amendment reduces, in crude terms, the rights of workers currently. What is the timescale for that being rectified?
On the question of what TUPE means and the definition of “TUPE-like”, again the regulations remove powers that exist. Where is the regulation that is going to bring forward the parallel arrangements to make sure that that continues in UK law? The rights of employee representatives, which were mentioned in particular by the noble Lord, Lord Monks, are similarly affected.
These may not seem to be very serious comments, but I think that people across the country will be concerned that their rights are being eroded. At the same time, politicians are saying that they should not worry about it, because the Government have in mind to make sure that there is no diminution. So it is not just a question of the diminution but of making sure that, when changes are made that would have happened had we stayed in the EU, those are also replicated in UK law. I would be grateful to hear the Minister’s comments on those points.
Lord Henley
My Lords, I thank all noble Lords for their comments. The noble Lord, Lord Monks, complained that these regulations had possibly been drafted before the talks were concluded. I have to say that it would be rather difficult to draft them after the talks were concluded because I suspect that they might be somewhat late. I think that to start drafting these amendment regulations at 10 minutes to midnight would not be the right way to go about it and I would be quite rightly criticised.
What I can say, and I think that the noble Lord will be pleased about this, is that the Employment Rights (Amendment) (EU Exit) Regulations were published in draft form in December 2017. That allowed for extensive consultation and allowed us to comply with the statutory obligation to consult the relevant bodies on a change made to the conduct of employment agencies and employment business regulations. We received, I think, two responses, one from the National Association of Schoolmasters Union of Women Teachers and the other from the Recruitment & Employment Confederation. I need not go into detail, but neither raised concerns about the drafting of the amendment: rather, they commented more on EU exit in general. We also, as I said, shared these regulations in draft with the TUC and with the CBI—so there was considerable consultation on them.
I shall repeat the commitment that has been made by my right honourable friend the Prime Minister, by my own Secretary of State and by Ministers throughout the Government. Now as a Parliamentary Under-Secretary of State I shall repeat it, although it has been made by people who are far important than me. We are committed not to rolling back on workers’ rights, and by laying these SIs we are upholding that commitment. We already go beyond the EU minimum in many areas of employment law; that is well known. I can say to the noble Baroness, Lady Burt, that we have no intention of making any changes to statutory maternity pay. People will not be affected whether we are in the EEA or not. That is true for all the concerns that have been put forward.
Looking to the future, as my noble friend Lord Balfe invited us to do, I would remind the House of what we discussed in a Statement debate—and there will be other chances to discuss it. Our Good Work Plan sets out our vision for the future of the labour market and our ambitious plans for implementing the recommendations that arose from the Taylor review. That important package will ensure that workers have access to the rights and protections that they deserve in a changing labour market, with the changing technology that we face. In addition, it will create a level playing field for employers, thereby ensuring that good employers are not undercut by the small minority who seek to circumvent the law. That is worth stating at the Dispatch Box as I move these instruments.
Perhaps I may deal with one or two specific concerns, in particular the drafting points made by the noble Lord, Lord Monks, and echoed by others. He asked whether the new phrase “TUPE-like powers” provide the same scope for power. The phrase “TUPE-like provisions” is needed to maintain the current scope of the powers, and the new wording ensures that the Government will continue to have the power to enhance workers’ rights as we do now. We will continue to do that and I repeat that commitment once again. The noble Lord also asked whether these statutory instruments would need to be amended following the talks that he referred to. I can make it quite clear again that these SIs are for no deal. We hope that once we have a deal they will be unnecessary.
The noble Lord also put a question about European works councils. He asked how the Government could claim to be preparing for Brexit when they did not have plans for workers to have proper representation in the absence of European works councils. We are preparing for a no-deal exit, as any responsible Government would do. UK employees will still be able to be represented on works councils—but, again, that will be a matter for the employer and employee representatives. Employees and their representatives on European works councils will retain their existing protections in all circumstances.
The noble Baroness, Lady Burt, asked about the differences as regards Northern Ireland. This is a devolved matter in Northern Ireland in a way that I do not think it is in Scotland. The TUPE-equivalent amendment in Northern Ireland is to the Employment Relations (Northern Ireland) Order 1999. However, in the continued absence of a Northern Ireland Executive, it is for the UK Government to take any necessary EU exit legislation for Northern Ireland through Westminster. However, I can give an assurance that the Northern Ireland departments have been consulted in the preparation of these statutory instruments.
The noble Lord, Lord Monks, also asked whether they would apply during any implementation period. Again I can say that they will be needed only in the case of no deal. I have dealt with the question of statutory maternity pay, which will remain the same. My noble friend Lord Balfe asked about the ability to repeal the legislation. If the SIs are no longer required on exit day we expect, as I think he quoted, to defer, revoke or amend them through further legislation in time for the end of the implementation period. Which route we take will be a matter for us to decide at the time—but, regardless of what we decide, we will uphold our commitment not to roll back on workers’ rights.
With that, I think that all I need to do is to repeat the assurance to the noble Baroness, Lady Crawley, and others that these amendments do not narrow TUPE powers: rather, they ensure that the Government will continue to have the power to enhance workers’ rights, as we do now. One last question was put to me about European works councils by my noble friend Lord Balfe. He asked whether we could apply the EU directive on EWCs like Switzerland. I repeat that these SIs are only for if there is no deal. Switzerland is covered by the directive under the deal that it has with the EU, so that would be a matter for future negotiations.
Lord Stevenson of Balmacara
I wonder whether the noble Lord could answer my question about the commencement date and the discontinuity between the fact that these are supposed to be brought in only on exit day although two of them refer to regulations that will come into force on the day they are passed—which presumably will be today. If the noble Lord does not have any inspiration at this moment, perhaps he could write to me.
Lord Henley
I had completely and utterly forgotten the noble Lord’s obsession with commencement dates in the excitement of dealing with orders of this sort. It might be that inspiration comes to me, but it may not be the sort of inspiration that would satisfy the noble Lord. I am told that the standard practice for statutory instruments is that they have a coming into force date. If that does not answer the noble Lord’s question, I will write to him.
I think that I have dealt with all the points that were put to me.
Employment Rights (Amendment) (EU Exit) Regulations 2019
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Lord Henley
That the draft Regulations laid before the House on 14 January be approved.
Employment Rights (Amendment) (Northern Ireland) (EU Exit) Regulations 2019
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Lord Henley
That the draft Regulations laid before the House on 14 January be approved.
Employment Rights (Amendment) (Northern Ireland) (EU Exit) (No. 2) Regulations 2018
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Lord Henley
That the draft Regulations laid before the House on 31 October 2018 be approved.
Nissan in Sunderland
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, with the leave of the House I shall now repeat a Statement made by my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy yesterday. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement about Nissan. The House should know the background to the decision the company announced yesterday. In July 2016, the allocation decision for the next model of the Nissan Qashqai was about to be made and it was set to be awarded to a European plant other than Sunderland. Nissan had located in Sunderland in 1986, having been persuaded by Mrs Thatcher that the combination of British engineering excellence and tariff-free access to the European Union made Britain an ideal location. So it proved, and the Sunderland plant grew to be the largest car plant in the history of Britain. The firm invested nearly £3.7 billion into it and currently employs over 7,000 people, with approximately another 35,000 in the supply chain.
The prospect of losing easy access to the EU market was the principal concern of the company at that time. It was clear that if Sunderland lost the Qashqai, which accounted for over half of its production, mostly for export, the medium and long-term prospects for a plant losing scale would be bleak. Determined not to see the 30-year success of this plant come to an end, we set out over the coming months a strong case for backing Sunderland. This centred on four areas, all of which were about highlighting the success of, and our strategy for, the British motor industry.
First, we would continue our successful and long-standing support for the competitiveness of the automotive sector, which has been available to all firms, for skills, training the local workforce and innovation. The regional growth fund has supported over 3,000 companies, large, medium and small, since 2010, with £2.6 billion of public support. Some £335 million has been invested in the automotive sector via the regional growth fund since 2010. All proposals are independently assessed by the Industrial Development Advisory Board and subject to UK and EU rules.
In 2016, Nissan initially considered applying for a total of up to £80 million in support over nine years for skills training, research and development and environmental improvements, and it was eventually awarded £61 million—around £7 million a year over nine years.
The second commitment was that we would work with the automotive sector to ensure that more of the supply chain could locate in the UK in close proximity to manufacturing sites. Since 2016, as many noble Lords know, our automotive sector deal established, with the industry, an ambitious programme to do that.
The third was that we would make a strong commitment to research and development, particularly to the development of new battery technology and its deployment, and in connected and autonomous vehicles. Our joint industry-government £1 billion advanced propulsion centre R&D programme, along with our £250 million Faraday challenge, is putting Britain at the leading edge of battery technology and manufacturing, and we have introduced test beds for autonomous vehicles across the country. Indeed, the longest autonomous car journey in the UK will take place in November this year from the Nissan site at Cranfield to its site in Sunderland, covering more than 200 miles on public roads.
Our fourth commitment was that in our negotiations to leave the EU we would always emphasise the strong common ground that exists between the UK and other EU member states and pursue a deal that could ensure free trade unencumbered by tariffs or other impediments.
These commitments proved persuasive, as they have subsequently for investments by Toyota at Burnaston, BMW Mini at Oxford and PSA at Luton. Indeed, every competitive allocation decision since 2016 in this industry has gone to Britain. Although discussions had been around the Qashqai, Nissan proposed towards the end of the discussions to add a further model, currently produced only in Japan—the X-Trail—to Sunderland. On 27 October 2016, Nissan announced that both the Qashqai and the X-Trail would be built in Sunderland, securing the plant’s future and adding 741 new jobs.
Last Friday I was informed by Nissan that following a global review of its capital investment, future capital was needed to accelerate the shift in Europe from conventional to lower-emission vehicles. The Qashqai and the Juke will in future have petrol and plug-in hybrid variants made in Sunderland, and as a result, more capital will be invested in Sunderland than was originally planned in 2016. However, this was accompanied by a decision to maintain Japan as the sole production location for the X-Trail model, rather than to establish a new production line in Europe. The consequence of this is that the existing jobs in Sunderland will be maintained by the increased investment, but the 741 additional jobs that would have been created in Sunderland will not now be available. Nissan confirmed that production of the new Qashqai, Juke and Leaf will continue at Sunderland, and that the decision has no implications for the existing jobs at the plant.
Nissan also pointed out, as it has done consistently since 2016, that the risk of a no-deal Brexit was a source of damaging uncertainty. While I am pleased that the decision taken in 2016 to build the Qashqai and secure the Sunderland plant is unchanged, it is deeply disappointing to me and to the workforce to find that the extra jobs that would have come from the X-Trail will no longer be created. I told the House that I would publish the correspondence with Nissan at the time of its original decision, as soon as the company advised that it was no longer commercially sensitive. I have previously shared it with the then chair of the Business, Energy and Industrial Strategy Committee, but I have now agreed with Nissan that it is reasonable to publish it in full today. Colleagues will see that it sets out exactly what I told the House in October 2016.
Grant support for training and development and for environmental improvements were applied for and approved by the Industrial Development Advisory Board on the basis that both the Qashqai and the X-Trail models would be built in Sunderland. Given yesterday’s announcement, if the company seeks to participate in those industry funding schemes—as I hope and expect it will—it will submit new applications in the standard way and undergo a process of independent assessment.
I am disappointed that the new jobs associated with the X-Trail will not now come to Sunderland, but I am pleased that the plant will benefit from substantial new investment in the existing models and that the decision to continue with the vital investment in the Qashqai, Leaf and Juke, and the jobs associated with them, is unaffected. These decisions were made on broader business grounds, but Nissan has commented on the need for us to come together to resolve the question about our future trading relationship with the EU. I believe that its advice should be listened to and acted on so that our automotive industry, which will undergo more change through innovation in the decade ahead than it has for most of the past century in areas such as battery technology and artificial intelligence, can seize the opportunities for Britain to be a world leader in state-of-the-art car making, providing great jobs and careers for hundreds of thousands of people during the years ahead. I commend the Statement to the House”.
My Lords, that concludes the Statement.
Lord Fox (LD)
My Lords, I too thank the Minister for repeating the Statement. Just over a year ago Secretary of State Greg Clark launched the automotive sector deal. Things were a bit different then: in a confident, upbeat foreword, he said that,
“the government is investing in a new industry-led programme to raise the competitiveness of UK suppliers to match the best in Europe”.
Today’s Statement underlines how much things have changed. How can the Government claim to be raising competitiveness when uncertainty and delay make it impossible for businesses to plan and invest? Nissan’s comments underline its struggle to plan ahead. Manufacturers do not even know what tariffs they will face at the end of next month, never mind the supply chain friction that will confront them. They are having to plan shutdowns in April to take stock of the situation. That is hardly raising competitiveness, and it is a key reason why confidence in the automotive industry is plummeting and, as the noble Lord on my right said, investment is halving.
One of the foundations of the Government’s industrial strategy was to create the best place to grow a business. It is clear that the abject confusion over Brexit and the surrounding discussions is weakening communities and the strategy. As the Minister said, we had confirmation yesterday that Nissan has decided not to build the X-Trail in the UK. However the Minister and the Secretary of State seek to dress this up, that is not a vote of confidence in the Government’s strategy. As the Secretary of State acknowledged, it injects uncertainty into an industry that is very important for the north-east—uncertainty over 7,000 direct-employment jobs and approximately 35,000 in the supply chain.
In the Statement, the Secretary of State was clear that Nissan had located in the north-east,
“having been persuaded by Mrs Thatcher that the combination of British engineering excellence and tariff-free access to the European Union made Britain an ideal location”.
So, when the chill winds blew in the year before last, the Minister acted fast and secretly to seek to insulate Nissan. In 2016, in order to reassure the company, the Government made a deal, which included public investment of around £60 million, as we heard, and was sealed in a letter that the Government moved heaven and earth not to publish. They cited commercial sensitivity as the reason—until this week, when publishing suddenly suited the Government. I have a number of questions about that letter.
First, what was commercially sensitive before that is not so now, particularly when the Secretary of State goes out of his way to explain that the funding surrounds the Juke and Qashqai ranges but not the X-Trail? That range will continue, so any commercial sensitivity should surely continue, too. Secondly, and perhaps more importantly, did the Government notify the EU competition authorities about their deal with Nissan? If not, why not? I note that in 2001 some £40 million of support for the production of the Nissan Micra was cleared through the EU. What was different about this support?
The Minister stated that the Government’s fourth commitment is to the,
“strong common ground that exists between the UK and other EU member states”.
I suspect that we would question that. He also said that Her Majesty’s Government would,
“pursue a deal that could ensure free trade unencumbered by tariffs or other impediments”.
There is no sign that the Prime Minister’s red lines will allow this to happen—and clearly Nissan no longer believes the Government either. The reduced sector investment tells the same story.
The prime phrase in all this is “damaging uncertainty”. Faith is falling, even in the Minister’s own department. His colleagues in the other place sound increasingly worried about what is going on and whether the right of his party will drive the country over a cliff. Mr Harrington has called no deal a “complete disaster”, while Mr Clark warned that a no-deal Brexit would be “ruinous” to the economy. Can the Minister tell us the adjective he would use to describe it?
Lord Henley
My Lords, before I answer any of the questions put to me by noble Lords, may I correct myself? I think I misread from my right honourable friend’s Statement, in that I suggested some 3,000 companies have been supported by the regional growth fund since 2010. In fact, the figure is 30,000. I apologise for that small error.
Lord Henley
It is a smallish error of 90%. I have at least corrected it.
I welcome the comments of the noble Lord, Lord McNicol. I agree that this is a blow to Sunderland. It would have liked those extra jobs, but we have to remember that there are still 7,000 jobs in Sunderland that have been there for some time, largely because of the work originally done by my former right honourable friend Lady Thatcher when she, as Prime Minister, encouraged Nissan to come here. There are some 35,000 more jobs in the supply chain. This is good for Nissan, Sunderland and the whole of the north-east.
The noble Lord accepted that Brexit was not the only factor and that there were other problems in the whole automotive industry. Yes, there are. If the noble Lord would care to look—I recommend that the noble Lord, Lord Fox, does so—there are problems in the automotive industry throughout Europe in a big way. This is nothing to do with Brexit; it is because of changes we are making to regulation, changes to diesel, changes to the Chinese market and so on. I could go on. It is not all related to Brexit.
We have a world-leading and highly productive automotive sector, generating a turnover of some £78 billion—£6.5 billion GVA—and directly employing 65,000 people. Over the past two years we have continued to see further investment decisions. Britain has won competitive decisions on allocation of new car models for Nissan, Toyota, BMW and PSA Vauxhall, creating jobs in Sunderland, Derbyshire, Oxford and Luton. We still have an industry that we can be proud of and that can continue to do well.
The motivations for Nissan’s decision must be a matter for Nissan. It has to make decisions relating to its workforce where its plants are throughout the world. We accept that Brexit will be one small part of that and, as Nissan said, that it is still waiting for clarity on what the future trading relationship between the UK and the EU will look like. We therefore repeat our request for UK and EU negotiators to work collaboratively towards an orderly, balanced Brexit that will continue to encourage mutually beneficial trade. That is what Her Majesty’s Government will continue to do, as my right honourable friend the Prime Minister has made clear. We do not want a no-deal exit. As my right honourable friend said, we will work towards the meaningful vote as soon as possible.
The noble Lord, Lord Fox, also asked about the commercially sensitive nature of that letter, which he rather cynically suggested my right honourable friend the Secretary of State had released only now because it suited him. My right honourable friend said at the time, back in 2016, that it was commercially sensitive as a result of discussions with Nissan. Nissan made it clear that supplier negotiations were under way. Those negotiations have now completed and it is therefore a matter that can be released. As my right honourable friend made clear, we are more than happy to do so.
Finally, I was asked whether the United Kingdom Government notified the EU of the £61 million support. I can give that assurance. It has been given on many occasions. The grant award was fully compliant with EU state aid rules. Details of the award were shared with the EU and published on its transparency website.
Lord Forsyth of Drumlean
Yes, it does. The EU was responsible. Under Gordon Brown’s Government we were encouraged to buy diesel cars and to put diesel fuel into them. The duty on the fuel was reduced. So to blame the manufacturers and Brexit for this problem is quite ridiculous. What are Jaguar Land Rover and Nissan, which have to plan in the long term for the production of their cars, to make of a regulatory regime that flips from being in favour of diesel one day to being against? Why are we surprised that Nissan no longer wishes to concentrate on producing diesel-operated vehicles in Europe and instead wishes to look to the future, to electric? Are the Government not to be congratulated on encouraging that investment in the north-east—an investment in the future, not in the past?
Lord Henley
I am very grateful to my noble friend for making those points and making them so well. I also declare an interest as an owner for the last 30 years of a whole series of diesel cars. Further, my wife—possibly inadvertently—bought a Volkswagen diesel at probably exactly the wrong moment, just before the scandal erupted in that field. I think we can say that changes to diesel regulations are a factor in decisions being made—decisions that the whole automotive industry has to make. It is also a factor for the Government to consider in deciding which new technologies we should support in future. I can give an assurance to my noble friend that the Government will continue, as he suggested, to support those new technologies.
The Lord Bishop of Lincoln
My Lords, I have been asked by my right reverend friend the Bishop of Durham, who is detained in his diocese, to ask the following question. While he recognises the promised protection of existing jobs, does the Minister recognise that Nissan’s X-Trail announcement will inevitably cause real worry for existing staff about the sustainability of their jobs, both at Nissan and in the supply chain? Will the Minister say how Her Majesty’s Government intend to allay such concerns at local level and what they might do to encourage Nissan to invest more in the development of electric cars and autonomous vehicles?
Lord Henley
I am grateful to the right reverend Prelate for asking that question and for underlining the obvious concerns of all people living in Sunderland, Durham and the wider north-east, including the 7,000 workers at Nissan and the 35,000 people supported in the supply chain. We will continue to talk to all concerned; we want to allay those fears. We are very grateful that Nissan continues to be committed to that site. It has made enormous investments there over the last 30-plus years. As the right reverend Prelate stressed, we will also continue to make investments in R&D and new technologies in other fields. The automotive industry is changing, and what we have all been saying about diesel holds true. There will be a decline in diesel sales, but we hope to see a greater take-up in others.
Lord Hannay of Chiswick (CB)
My Lords, does the Minister not recognise that the real story here is that the Government—perhaps understandably—in 2016 gave an undertaking to Nissan that there would be no deterioration in its access to the European market, which they have proved unable to deliver? That is the real story, is it not?
The Minister referred to Baroness Thatcher and the role she played in getting Nissan established. I fundamentally and absolutely agree with that. I was the British Permanent Representative at the time. We had a lot of trouble because the French Government wanted origin rules to be applied to the production in Sunderland, which would have destroyed the case for investment there. Thanks largely to the late Lord Cockfield, that attempt was defeated. How sure is the Minister that, if we leave the European Union, the issue of origin rules will not arise again and affect the capacity of foreign investors in this country to export cars to the European Union?
Lord Henley
I am grateful to the noble Lord, Lord Hannay, for paying tribute to the late Lady Thatcher and for reminding us of the work of the late Lord Cockfield, whom many of us remember. As regards what will happen to the rules for the future, that will depend very much on negotiations. Those negotiations will continue. I very much hope that we get a deal that is suitable to make sure that this company can continue to flourish. I am sure that it will continue to flourish, and will continue to flourish in Sunderland, irrespective of what happens.
Baroness Quin (Lab)
My Lords, I echo the concerns raised by the right reverend Prelate, but in its statement Nissan specifically mentioned the uncertainty created by Brexit. Another factor too is the recent conclusion of the EU-Japan trade agreement, which will make exporting from Japan to the EU and vice versa cheaper and simpler. Yet that is an agreement that we risk being excluded from after 29 March. Can Nissan and the people of Sunderland be assured that we will not have a no-deal Brexit that will make an already worrying situation even more serious?
Lord Henley
My Lords, again, I understand why the noble Baroness talks about the uncertainty in Sunderland and the rest of the north-east—an area that I remind her voted heavily back in June 2016 to come out. I particularly remember the vote on that night. A great many of us, including the noble Lord, Lord Adonis, will remember the moment when the vote took place in Sunderland. Anyway, we will continue to work, as I said, for the north-east and my right honourable friend made that clear. She also drew attention to the EU-Japan trade agreement. That gives us a model for what we want to work for. That is what we will do to secure the future of the people of Sunderland and I hope the noble Baroness will assist us in that.
Baroness Randerson (LD)
My Lords, the Government recently removed and reduced some of the grants for those buying hybrid and electric cars. Since then, sales of those vehicles have been very sluggish. That is yet another problem for the automotive industry to deal with. So will the Government undertake to restore incentives to purchase the cleanest vehicles and, at the same time, assist our automotive industry?
Lord Henley
My Lords, I will not discuss specific grants for any specific type of vehicle. I have made it quite clear that we are committed to supporting research and suchlike in new technologies for new vehicles because things of this sort are changing. Getting any grant structure right is obviously very difficult. One wants to avoid perverse incentives that push people down the wrong route—one thinks possibly of incentives made in terms of the pricing of diesel. The fact is that we no longer support diesel in the way that previous Governments did, and that has had a big effect on the market. But we are committed to seeing new technologies emerge in this area.
Lord Hamilton of Epsom
No, it is not the turn of the Cross-Benches. We have just heard the noble Lord, Lord Hannay.
Does my noble friend accept that Nissan would have been absolutely mad to have gone ahead with the programme for the X-Trail when the whole of the market for diesel vehicles has collapsed? Does he accept that this is largely to do with the overreaction of European Governments, including our own, to the diesel emissions scandal, which was started by Volkswagen in Germany?
Lord Henley
My Lords, I am not going to allocate blame, particularly because, as I mentioned earlier, my wife was one of those who made the mistake of buying a VW just before the diesel scandal erupted. The fact is that there has been a concerted attempt to reduce the number of diesel cars, for whatever reason. For that reason, Nissan has to make hard-headed decisions about what cars it invests in and in which plants it should be investing.
Lord Birt (CB)
Like many of your Lordships, I have substantial and continuing experience of the real economy. The important story here is that Nissan is not unique but typical. Routinely, I experience decision-makers in business and in the international investor community building Brexit into their day-to-day calculations. The result, as we have seen, is a massive loss in the value of our currency and the UK experiencing the lowest growth rate among the G7. Does the Minister agree with his Business Secretary that a no-deal Brexit would be ruinous?
Lord Henley
My Lords, I accept that a no-deal exit would be difficult. The point we are making is that we do not want no deal; that is why we are looking for a deal. Other than that, I have to say to the noble Lord that he paints a unduly gloomy picture. Things might be difficult for the automotive industry but, as I made clear, he will have seen that over the past few years—that is, since the vote in 2016—competitive decisions have been made in the automotive industry that have brought new car models to Nissan, Toyota, BMW, PSA Vauxhall in the UK, and that has created jobs in all parts of the country.
Lord Lennie (Lab)
My Lords, other car makers in this country—Honda, Toyota and BMW—have pulled out from bringing models to this country. That demonstrates a lack of confidence in the future of manufacturing here, due in part to Brexit uncertainty. Nissan clearly does not feel that it can rely on the assurances given by the Secretary of State in his recently published letter that there will be free, frictionless trade between here and Europe. Why not?
Lord Henley
Things have changed. It is not solely to do with that. As other noble Lords have said, the whole car industry is going through a rather turbulent time. We only have to look at what has been happening in, for example, sales of diesels. For that reason, Nissan has to make difficult decisions. It has decided that it will go ahead with the X-Trail but will build it in Japan, no doubt for markets over there. Nissan is still committed to Sunderland. There are still 7,000 jobs there. There are still 35,000 more jobs in the supply chain. Things are not as bad as the noble Lord is trying to suggest.
Baroness Kramer (LD)
My Lords, as a Minister in the coalition, I had the privilege of visiting the Nissan plant in Sunderland, and I also visited most of the major Japanese car companies’ headquarters in Tokyo. As a consequence, I am very aware that British plants won the right to produce cars for these various companies by only the tiniest hair’s breadth, as a competition is run across the globe, and certainly across Europe, for each new piece of investment and for each new major production line. Does the Minister recognise that if he cannot give an assurance that there will be absolutely no increase in friction and non-tariff barriers, by definition those plants have no possibility of winning such competitions in future?
Lord Henley
My Lords, decisions on where to invest are very difficult. The noble Baroness is quite right to say they are made by a hair’s breadth. One of the reasons companies come to the UK is because they know that we have the right people in the right places. That is why they go to Sunderland and why we got that investment in the right place. We should be proud of that. We will continue to seek other companies to come to invest in this country, like the companies I mentioned earlier have done. The noble Lord opposite suggested that BMW and Honda made competitive decisions that went against the UK. I am advised that that is not the case and no competitive decisions have gone against the UK in recent years.
Lord Tugendhat (Con)
My Lords, does my noble friend agree that, in an uncertain situation, one thing is certain—that if we go out of the EU without a deal, cars manufactured in Japan will be able to enter the EU on more favourable terms than cars manufactured in the UK?
Lord Henley
My noble friend is absolutely right about the recent trade deal agreed between the EU and Japan, and that is why we in the UK should seek to emulate deals of that sort. We are not seeking no deal; we are trying to get a deal. Let us all come together and try to get that.
Lord Lea of Crondall (Lab)
Can the Minister confirm that he is saying that the rules of origin question does not arise in the deal currently proposed by the Government?
Lord Lea of Crondall
Can the noble Lord confirm that the origin rules problem does not arise in the present deal proposed by the Prime Minister?
Lord Henley
The origin rules problem is very detailed and complicated in terms of the percentage of any car that is manufactured on any particular site. If the noble Lord would like me to do so, I shall write to him in greater detail on that subject.
Baroness Ludford (LD)
My Lords, can the Minister inform us how many Brexiteer parliamentarians have been CEOs of major manufacturing companies, such that they purport to know better than the CEOs of, say, Honda or Airbus what the problems of Brexit are?
Lord Sterling of Plaistow (Con)
My Lords, in April last year the percentage of people buying diesel cars was 70.2%; it is now precisely 31%. That answers most of the questions today. Nissan is a very fine company. We have wonderful engineers in this country but if I were the chairman of Nissan today, I would have made exactly the same decision, which is most sensible. We will catch up when we have agreements in the future with countries such as Japan.
Lord Henley
I am very grateful to my noble friend for underlining what has happened to diesel sales, which is obviously a major factor in the decisions in this matter.
Lord Wigley (PC)
My Lords, the Minister in the other House made it clear that he was reinviting Nissan to submit an application for assistance on possibly different terms in order to overcome the difficulties that might now be facing the company. Can the noble Lord confirm that such an offer will be equally open to companies such as Ford, which is facing similar difficulties in Bridgend?
Lord Henley
My Lords, it is open to any company to apply for any funds that are available, as my right honourable friend made clear in the Statement, and that will be reviewed in the proper way, independently of my right honourable friend. I can tell the noble Lord that, of that £61 million, about two-point-something million pounds has been spent. It will be up to Nissan to make an application for the rest of it, although obviously it will not be needing it at the moment.
Lord Scriven (LD)
My Lords, as more decisions about where to make new models arise, is not the fear that car makers will look less favourably on a Britain that is outside the security of a large trade bloc, whatever the terms of an exit?
Lord Henley
I think that car makers will continue to look at the investments that they have already made and at the very great skills that are available in the United Kingdom. They will also continue to look at the R&D that we support for an industry which, as all noble Lords have been pointing out, is changing very fast with the decline in the demand for diesel but which is seeing growth in a great many other sectors.
Home Care Workers
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Lord Wills
To ask Her Majesty’s Government what new steps they will take to ensure that home care workers are paid the national living wage for travelling between appointments.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the law is clear: workers are entitled to the minimum wage for time spent travelling from one client to another. The Government are committed to enforcing minimum wage legislation. Workers who think they might be underpaid should first speak to their employer. Alternatively, they can call the ACAS helpline for advice and referral to HMRC for possible enforcement action.
Lord Wills (Lab)
I am grateful to the Minister for that reply. I am glad he recognises that there is a problem, and I hope he agrees with me that more needs to be done to address it. It is a disgrace that UNISON has estimated that over 50% of home care workers do not receive any payment for travelling between appointments. The National Audit Office has estimated that up to 220,000 such workers do not receive the national minimum wage. Clearly, something is going wrong and more needs to be done. The Government might be able to look at the way the Care Quality Commission regulates home care firms and to insist that it scrutinises all standard contracts to ensure that workers receive the payment they are due for travelling between appointments. Will the Minister agree to explore this option—I hope he will write to me with the results of his exploration—and if not, why not?
Lord Henley
My Lords, I will look at the figures the noble Lord cited. I am not sure I fully accept them. The role of the Care Quality Commission is to make sure that health and social care services provide people with safe, effective, compassionate and high-quality care. It is not within the remit of its inspectors to check the contractual arrangements of each home care worker. I will certainly ask officials to look at that and to ask colleagues in the Department of Health. I also make it clear that local authorities, when commissioning services and when guidance has been issued by the Government, should assure themselves and have evidence that their service providers deliver services through staff remunerated so as to retain an effective workforce. Remuneration should be at least sufficient to comply with the national minimum wage legislation via hourly pay or equivalent salary. That will include appropriate remuneration for any time spent travelling between appointments.
Baroness Burt of Solihull (LD)
My Lords, the Minister says that the law is clear, but the problem lies with its enforcement, as the noble Lord, Lord Wills, has said. Too many home care workers get confusing pay packets which can obscure the fact that they are not being paid for travel time. Could it not be made a legal requirement that employers separate out travel time and make pay packets clearer on the different elements of pay?
Lord Henley
The noble Baroness is right to draw attention to transparency in pay packets, and I can give an assurance that legislation will take effect in April of this year for the first time entitling all workers to receive a pay slip. Where a worker is paid with a reference to time worked, the pay slip will now also detail the number of hours worked.
Baroness Gardner of Parkes (Con)
My Lords, I have personal experience of this through someone we helped eventually to get citizenship here—it took 10 years and was supported by other Members of this House—and she now works as a carer. I asked her about this issue following the court ruling that they should be paid for travel between appointments, and she said that the issue had never been brought up. I wrote her a letter pointing out that this was position, and she handed it into the agency that she works for. The agency immediately tore it up and said, “You have no right to discuss our affairs with anyone else”. To this day, she has still not had a penny for travel, even though most of her work is one hour at this place and then half-an-hour’s walk to the next. She is playing a valuable role, but the ruling of the court is absolutely ignored.
Lord Henley
My Lords, I did not want to comment on any individual case, but what my noble friend has said sounds completely and utterly wrong. As I have said, the law is clear. I recommend that my noble friend tells her friend to take advice from ACAS, which I hope would then recommend enforcement by HMRC.
Lord Watts (Lab)
My Lords, is it not the case that the minimum wage was introduced to give an hourly wage? If that person is travelling and not being paid, does that not undermine the principle of an hourly minimum wage?
Lord Henley
My Lords, the point is that the travelling time between the two jobs should be taken into account: it should be part of what is called the pay reference period. One should look at the whole pay reference period and make sure that it is compliant with the minimum wage legislation. If there is any doubt, take advice from ACAS.
Baroness Watkins of Tavistock (CB)
My Lords, it would be helpful if the Minister could comment on the challenges to local authorities of trying to place contracts for people who need at least three visits a day in rural communities, where the time spent between visits is significant and they are unable to fully factor in those costs. Is he aware that in some places they are choosing to use different carers for the same individual across the 24-hour period so that they avoid paying some of the travel costs?
Lord Henley
My Lords, we are dealing with the pay of individuals and the travel costs between the two visits. I have tried to set out what the law is, and I think that it is perfectly clear. On funding for local authorities, it is for them to decide how to deal with it. The Government have given councils access to £3.6 billion extra funding for adult social care in 2018-19 and £3.9 billion in 2019-20.
Baroness Wheeler (Lab)
My Lords, this is predominantly a female workforce, often employed under precarious employment conditions—on zero-hours contracts without any guarantee of the number of hours worked or available each week. The Resolution Foundation estimates that care workers are collectively cheated out of £130 million each year. Age UK says that we will need 650,000 extra care workers for the future. We know that we need 130,000 care workers just to meet today’s demand. Does the Minister agree that giving care workers a decent living wage for all the time spent on the job is not only fair but vital to recruiting new staff and addressing current and future chronic staff shortages? If he does, what is he going to do about it?
Lord Henley
My Lords, we believe it is vital that they are paid properly and that is why we gave advice to local authorities on how they should perform their duties. I repeated that advice on what local authorities should do to the noble Lord, Lord Wills. We have also made funding available to local authorities, so it should be for them to ensure that they have the right people to do the job.
Climate Change
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the debate is due to end at 5.55 pm, so I hope the noble Lord, Lord Teverson, will understand if I eat into any time that he was hoping to use to wind up at the end of this debate. I take this opportunity to join all other speakers in congratulating him on introducing this debate and, as my noble friend Lord Bethell put it, on doing so in such an optimistic and positive manner. It is important to be optimistic on these matters, as most speakers have been. The noble Lord, Lord Redesdale, said that I had accused him of being a Jeremiah—I have possibly accused all Liberals of that on this subject in the past, and I will probably do so again. It is my nature to be an optimist, and I am an optimist in this field. Dare I use the title of my noble friend Lord Ridley’s book and say that I am a Rational Optimist on these matters? We have a good story to tell; I say that as a Minister in this Government, but it is a good story for the United Kingdom as a whole. We can refer back to the 2008 Act, which went through with the agreement of all parties. We can refer back to the work of the coalition Government. All three parties and the entire country have played a role.
I again offer my congratulations to the noble Lord, Lord Teverson, on the expertise that he attracted to the debate. We are very fortunate when one considers that we have such people as the noble Lord, Lord Rees; the noble Baroness, Lady Brown, vice-chairman of the CCC and chairman of its adaptation committee; and the noble Lord, Lord Chesterton, a former head of the Met Office. I think it is almost 25 years since I visited the Met Office as a Minister in another department; we all grow old. There has been expertise from all sides, and to that I add my noble friend Lord Selbourne, given all the work that his various committees have done over the years. That is not to downgrade the expertise and experience of all the others who have spoken in the debate. I was very grateful for the brief intervention from the noble Viscount, Lord Simon, on volcanoes. I shall not respond to that now, but if I get an inquiry in due course, I shall write to him—but it might be beyond me or even those who advise me.
As always, I begin by repeating the assurances that the Government have always given about where we are on the threats posed by climate change. I stress again the commitment that all Governments have made over many years to deal with it, and to demonstrate global leadership in doing so. We are already seeing major impacts of climate change both globally and here in the UK. Many noble Lords have spoken of the various changes we have seen. I add to that that we have had the 10 warmest years on record since 1990; eight of those have been since 2002. The hottest days of the year are getting hotter; minimum temperatures are getting milder.
I heard it put in much the best and simplest terms by an old land manager in my part of the world, Cumbria, when he retired. He said, “Every year has been the somethingest”. It is not necessarily all going in one direction, but as I think we all want to point out, the weather becomes more unreliable, the climate becomes more unreliable and we are seeing more extreme events. I put it in these terms: every year has been the somethingest, and the trend is clear.
Much reference has been made to last October’s intergovernmental panel on climate change and its special report warning of global warming of 1.5 degrees. It is the most comprehensive assessment we have of the evidence for that rise in global temperatures and its impact. Its most pressing message is that the world must act with urgency, because the evidence suggests that we are currently on track for a 3-degree rise in global temperatures, and we cannot say how devastating that could be. Large-scale irreversible effects such as melting ice sheets would continue to have an impact not just for a short period but for centuries to come. Biodiversity and ecosystems could be affected. The noble Baroness, Lady Walmsley, rightly referred to the loss of coral reefs. According to my figures, some 90% of coral reefs could be at risk. Poor and disadvantaged populations would be disproportionately affected, particularly those on small and low-lying islands. Our food and water supplies and infrastructure would be threatened.
The report states that with concerted effort and urgent action, we can limit warming to 1.5 degrees, but even that will obviously have a significant effect for which we need to be prepared. However, the most serious impacts caused by rises in temperature would be avoided.
That raises two questions: first, how do we protect the UK and other countries from those inevitable rises; secondly, how do we limit temperature increases to avoid the projected 3-degree rise? The answer is adaptation and mitigation, and I will address both in turn. On adaptation, some climate impacts are unavoidable, so we are integrating climate risk into our long-term planning. We recently published our second national adaptation programme. I apologise in advance to the noble Lord, Lord Teverson, because I will refer to a number of programmes we have published; indeed, he said that the road to hell would be paved with them. However, if we were not making plans of this sort, I believe I would hear even more from the noble Lord. It is right that we make plans.
As a result of that programme, we will invest £2.6 billion between 2015 and 2021 to reduce flood and coastal erosion risk. We review multiagency flood plans on an annual basis; coming from Cumbria, I take that particularly seriously. We have had two pretty bad occasions of flooding there in this century alone: in Carlisle, where I live, and in west Cumberland, in Cockermouth. I remember going to Cockermouth as the Adaptation Minister and seeing the work being done there. The noble Baroness, Lady Brown, is right to point to the small things one can do when rebuilding and developing houses, including moving power points higher so that when the floods come in next time, with a bit of luck, the electrics will be beyond the water. So things are happening.
Since 2003, an annual heatwave plan has been published by the Department of Health; I think it was the noble Baroness, Lady Walmsley, who talked about problems there. We are also helping developing countries to deal with the impacts of climate change: building their capacity to take action and catalysing large-scale public and private finance initiatives. Our climate finance has already helped 47 million people to cope with the effects of climate change, supported 17 million people to access clean energy and reduced or avoided more than 10 million tonnes of CO2. So we are doing a lot on adaptation, and I assure the noble Baroness, Lady Brown, that we will continue to do so.
On mitigation, how can we do our bit? One small island can only do so much, so the rest of the world must do more to limit temperature rises. We can limit our emissions, develop technologies and drive international action; indeed, we are doing all three. In 2008, the UK led the world by passing the Climate Change Act. As the noble Lord, Lord Teverson, said. we can be collectively proud of that. The Act requires us to reduce emissions by 80% by 2050, compared with 1990 levels. The Act created the world’s first legally binding targets and provided a blueprint for climate action internationally.
Since then, we have shown that we are serious about decarbonising our economy. We are showing the world that you do not have to choose between growth and climate action. I am grateful to the noble Lord, Lord Teverson, for stressing the figures: we have reduced emissions by more than 40%, compared with 1990 levels. He gave the figure of 43%, which I think is correct. At the same time, the economy grew by some two-thirds. We outperformed our first carbon budget and are on track to meet the second and the third. However, we recognise that we need to go further, and therefore I hope that in due course we will show that we can move towards the very demanding fourth and fifth budgets.
We have published the Clean Growth Strategy, which again sets out our robust plans to tackle the challenging decarbonisation still to come. It sets out policies until the end of 2030. Again, I have to say to the noble Lord, Lord Teverson, that I do not think that that is a question of chopping and changing. It focuses on areas where decarbonisation has clear joint benefits such as cleaner air from low-emission vehicles and so on. We have set ourselves ambitious targets to meet the challenges ahead. For example, we want to improve business efficiency by 20% by 2030 and improve the energy efficiency of existing and new buildings by then. We want to end the sale of all conventional petrol and diesel cars and vans by 2040 and to develop one of the best electrical charging networks in the world. Noble Lords will know that further research is going on in universities up and down the country, much of which the Government are supporting. We are also looking at hydrogen and other areas.
Agriculture is a concern of my noble friend. There too we are getting on and making progress, but I should say to him that we also welcome the CCC’s report on land use, which makes an important contribution to the evidence base. We will consider it very carefully and we look forward to the CCC’s follow-up feasibility report next year.
Our commitment, investment and strategy are helping us to become a world leader in low-carbon business. The world is turning towards clean energy and we will support UK companies to take full advantage of this opportunity. Through the support of Governments of all persuasions—Labour, the coalition and the current Government—we have already seen a reduction in the cost of renewables, allowing us to increase their use dramatically. In 2017, some 50% of our electricity was generated by clean sources, while last year we achieved a record 76 hours of continuous coal-free electricity generation. By 2025 we will have phased out coal from our energy mix altogether.
We will continue to support and improve the route to market for all renewable technologies. I will give just one example, which is that of offshore wind. We are making some £557 million available for the further contracts for difference. More is happening with offshore wind generation. I recently visited what is now the largest wind farm in the world, off the coast of Cumbria. We are making enormous progress and seeing the costs coming down—we referred to this only last week in our short debate on the subject of nuclear generation. Nuclear becomes harder and harder as the cost of renewables comes down and as we see advances in the technology for battery storage and other forms of generating energy.
I am coming rapidly to the end of my time and have only two minutes left. I am afraid that I am going to have to say to my noble friend Lord Caithness that on this occasion I will not be addressing his concerns about the shifting of magnetic north. It is probably important and I can assure him that there is some research into its possible contribution to changes in climate variability. If I can find out more, I will let him know and write to him.
There are other questions I would love to have addressed but, as I said, I wanted to give that optimist’s picture. We are at the forefront of efforts to tackle climate change domestically and abroad. But, having been optimistic, I do not want noble Lords to accuse me or the Government of being complacent. We recognise that the delivery of our future carbon budgets will require concerted action across the economy. We want to build on the success achieved by all Governments to date to deliver cost-effective emissions reductions in our homes, businesses and transport. This was part of the general theme expressed by all noble Lords and is something that the Government—but also academia, business and civil society—have to do.
The Deputy Speaker (Baroness Morris of Bolton) (Con)
My Lords, I apologise but the time allotted for this debate has now elapsed and therefore I must put the Question.
Justification Decision Power (Amendment) (EU Exit) Regulations 2018
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Lord Henley
That the draft Regulations laid before the House on 23 November 2018 be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Justification of Practices Involving Ionising Radiation Regulations 2004, which I will refer to from now on as the justification regulations, provide a framework in which justification decisions regarding ionising radiation are made. Justification decisions are an important part of our regulatory regime surrounding ionising radiation, as they determine whether a practice involving ionising radiation is justified in advance of being first adopted or approved. In addition, it may be determined that a class or type of practice is no longer justified as a result of a review.
The power to make these decisions is currently provided by Section 2(2) of the European Communities Act 1972. Following the United Kingdom’s exit from the European Union and Euratom, and repeal of the 1972 Act, the justifying authority will no longer retain the power to make justification decisions regarding practices involving ionising radiation. This instrument will correct this inoperability by providing the justifying authority with a replacement power to make such justification decisions. The powers to make this secondary legislation are found in the European Union (Withdrawal) Act 2018.
Before I explain the changes in more detail, it may be helpful to provide background information on the Government’s position in relation to the justification of practices involving ionising radiation. The UK is committed to maintaining an up-to-date and internationally concurrent justification regime, in order to remain a world leader in radiological safety, as well as maintaining our international reputation and status as a trusted partner with whom to trade nuclear skills, services and materials.
The justification regulations are the first step towards regulatory approval for a new class or type of practice involving ionising radiation, including medical treatments and new nuclear reactor designs. These regulations provide a framework setting out how government determines whether the practice is justified. “Justified” here means that the individual or societal benefit of the practice involving ionising radiation outweighs its potential detriment to health. These decisions are taken by the justifying authority. This can be the Secretary of State of the relevant department or, in some cases, the devolved Administrations, in the form of regulations.
The justifying regulations cover activities which fall within both reserved and devolved subject matters. To ensure consistency in how the process for making justification decisions is dealt with across the UK and different reserved and devolved subject matters, the devolved Administrations have to date been content for the UK Government to establish and make changes to the justification regime, using UK-wide regulations. This instrument will allow the UK Government to make UK justification decisions in reserved areas using UK-wide regulations. It will also allow the devolved Administrations to make justification decisions using regulations covering their own geographic areas for activities falling within devolved subject matters. We have received letters of consent from each of the devolved Administrations agreeing that they are happy to proceed with this instrument.
I will now briefly expand on the amendment itself. On 29 March 2017, the Prime Minister triggered Article 50 and started the UK’s exit from the European Union. To give effect to the UK’s exit in domestic law, the European Union (Withdrawal) Act 2018 will repeal, as I said earlier, the 1972 Act at the moment of exit. However, to ensure continuity for the UK, the withdrawal Act will preserve EU-derived domestic legislation so that it continues to have effect in domestic law. This will leave our statute book with several EU-related inoperabilities, the power to make justification decisions being one example of this.
The purpose of this instrument is therefore to provide the justifying authority with a replacement power to make justification decisions under the justification regulations, once the current power ceases to be available as a result of the repeal of the 1972 Act. Such a power will be created by this instrument using the powers in Section 8 of the European Union (Withdrawal) Act 2018. It is important to note that this instrument does not allow the Secretary of State or devolved Administrations to make decisions in any other way, or with any greater freedoms than they currently do with respect to the justification regulations. Unlike the wide power under Section 2(2) of the 1972 Act, this replacement power is a narrow one that is limited to making justification decisions for the purposes of the justification regulations. It should also be mentioned that future justification decisions which determine that a new class or type of practice is justified will be made by affirmative regulations and therefore will be subject to debate in the House as usual.
Looking forward, my department is currently aware of several potential justification applications that may require a decision by the Secretary of State in the future. These applications will require a functioning justification regime to ensure that they are subject to the appropriate scrutiny procedures. For example, the HPR1000 reactor, intended for use at Bradwell, is a new nuclear reactor design which would require a justification decision before it could be deployed.
I hope that we can reach an agreement that these amendments are necessary to ensure a functioning statute book on exit day regardless of the outcomes of the negotiations. I therefore commend these regulations to the House.
Lord Adonis
I am intervening on the Minister before he sits down. Will the organisation called the justifying authority, which I understand is the organisation which takes these decisions, be affected in any way by the regulations, or will it continue in the same way after a no-deal withdrawal as before? This is a very technical area with which I am not familiar, but my reading of the regulations is that there is an organisation called the justifying authority whose decisions at present depend on EU law and the Government are investing those decision-making powers in the same authority but through UK law. Can the Minister confirm that that is the case and that I have understood it properly?
Lord Henley
My Lords, it is complex and technical. There is no one body called the justifying authority; there are a number of different authorities. On certain occasions, it will by my right honourable friend the Secretary of State for Business; on other occasions, if it was a matter relating to health, it could be the Secretary of State for Health. As I made clear earlier, where it was a devolved matter, it could be the devolved Administrations.
Let me give an example to illustrate how a whole range of things are covered—I am thinking of something that has been in the news recently. If prisons wanted to install a new system for examining or scanning prisoners and others as they came through—I believe that that has already been justified—that involves ionising radiation. I shall now add a further complication: one might presume that the Ministry of Justice would be the justifying authority in that matter, but on this occasion it would be the Home Office. In other words, it would have to look at what the risks to people using these things might be and whether the societal benefits that I referred to earlier were greater such that we wanted to install the technology, hence the need for a justifying authority. There are a number of justifying authorities.
Unlike some other regulations that the noble Lord and I have debated, these are both what we could call deal and no-deal regulations. We are just trying to make sure that the right order is in place so that life can continue as before, with the appropriate justifying authority making the appropriate decision.
Lord Pannick (CB)
Can I ask the Minister some questions before he sits down?
Lord Grantchester (Lab)
My Lords, the Minister is correct to portray the order before the House today as merely a technical replacement justification power, where “justified” means that the benefit resulting from the practice outweighs the risk and potential health detriment it may cause, under the ionising radiations regulations or the directive. These regulations are a first step towards regulatory approval for any new class or type of practice involving ionising radiation, such as a medical treatment or new nuclear reactor design. These activities are important, and it is important that they are regulated properly. To my mind, they are as needed in any situation as they are needed for exit from the EU. To me it is a straight transposition from an EU-derived power to a UK power to give effect to the UK’s exit in domestic law. There should be no issues with this order.
This is the latest type of Brexit—I am calling it a continuity Brexit—to allow EU-derived legislation to continue to have effect in domestic law, and this order is merely a replica of previous ones. I approve the order today.
I understand that the Government Whips’ Office in the other place has a new sweetie box as a reward system, whereby Ministers are rewarded for each successful continuity order passed before exit day. I trust that the Minister will be rewarded with a bonus issue for this order.
Lord Henley
On that last point, I have had an assurance from my noble friend Lady Vere that a reward will be on offer—but let us wait until we have got through all four of these before I rely on the generosity of her offer: she might change her mind later.
Let me deal with the points that have been raised. The noble Lord, Lord Pannick, asked when these were published. I can assure him that they were published on 23 November last year. The instrument makes absolutely no changes to policy: it is just a technical amendment to ensure the continued operability of the justification regulations, and therefore a public consultation was considered unnecessary and inappropriate. Subsequent regulations made using the power contained in this instrument will continue to be subject to the consultation requirements, where the justification regulations impose on the making of justification decisions.
Lord Pannick
Can the Minister then give an undertaking that those exit regulations brought before the House that do make policy changes will be the subject of public consultation?
Lord Henley
My Lords, where appropriate, that will happen. I can speak only for regulations that I will bring before this House relating to my department—but the noble Lord will no doubt be in his place to listen to other Ministers and other regulations as they come through. I repeat that, when we come to make further decisions under these regulations, at that moment—because there might be a change in policy—those decisions will be subject to the consultation process that I spoke about. If the noble Lord will bear with me, I will give way on this.
Lord Pannick
I am very grateful for the noble Lord’s patience. Is he then giving that undertaking in relation to regulations brought forward by his department—that if they are exit regulations that make a change of policy, they will be the subject of public consultation before they are brought before the House?
Lord Henley
That is not what I said. I said that, where appropriate, we will consult if it is possible. Most regulations we are bringing forward deal with the eventuality of a no deal. Obviously, there will be constraints on the full consultation process that the noble Lord is seeking. That was clear in other regulations with which I dealt in the Moses Room on another occasion. As with these, we went into extensive consultations with the devolved Administrations—because they are the relevant bodies—and we have consulted within government, because a lot of different justification authorities abound. Where appropriate, we will consult: I can say no more than that.
The noble Lords, Lord Redesdale and Lord Warner, wanted to know in effect how the justifying authority worked. I think that the noble Lord, Lord Warner, wanted to know whether they were simply no-deal regulations. What I was trying to say was that these are both deal and no-deal regulations—even if there were a deal, we would still need these regulations. They would not become defunct in the event of a deal. We want to make sure that this is right whatever happens, and I hope that will be the case.
Lord Warner
Perhaps I may come back on this, because there is a matter of principle here, particularly following up on what was said by the noble Lord, Lord Pannick. The Minister will recall that we had some fruitful, if somewhat lengthy, discussions in Grand Committee on some of these regulations. We were debating the idea that these were no-deal exit regulations, and there was often a dispute over whether the regulations did or did not change policy. The Government’s view on some regulations was not necessarily shared by other Members of this House, but I think we were inclined to be tolerant on the basis that these were no-deal regulations, rather than regulations that would continue into the future. So is it going to be a pattern now that we will get these regulations, in a number of areas, presented as no-deal regulations, but then find that—lo and behold—there has been a change in policy that has slipped through, with no consultation, and that the regulations will continue into the future? The Minister might want to say that I am showing my customary paranoia on this issue, but it is a serious point that we in this House need to be clear on when we deal with these regulations. Our attitude will be very much conditioned by whether they are no-deal regulations or whether they will carry on into the future.
Lord Henley
To make life easier for the noble Lord, I can assure him that the other three regulations—to which I will be speaking later—are purely no-deal regulations. I do not think the noble Lord is paranoid about this—he is quite right to explore these matters. But I want to make clear to him that there is no change of policy in these regulations; we are just trying to make sure that things are okay on 29 March. That is the case, deal or no deal.
I think that that deals with his point and the point made by the noble Lord, Lord Redesdale. I believe therefore that I have answered the questions put before me. I am grateful again to the noble Lord, Lord Grantchester, for his comments.